Pennsylvania governor won’t sign budget over lack of pension reform

HARRISBURG Penn. Tue Jul 1, 2014 8:45am EDT

Pennsylvania Governor Tom Corbett speaks at a news conference on the Penn State campus in State College, Pennsylvania January 2, 2013.   REUTERS/Craig Houtz

Pennsylvania Governor Tom Corbett speaks at a news conference on the Penn State campus in State College, Pennsylvania January 2, 2013.

Credit: Reuters/Craig Houtz

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HARRISBURG Penn. (Reuters) - Pennsylvania Governor Tom Corbett said on Monday that he would not for the moment sign a $29.1 billion budget enacted by the legislature because lawmakers had failed to include pension reform. Corbett, a Republican with sagging poll ratings who is up for re-election this year, wants to push new state employees onto a so-called "hybrid" pension plan.

Under his proposal, the first $50,000 of employee income would qualify for the existing, defined benefit pension plan, while anything above that would feed a 401(k)-style defined contribution plan. But for the second consecutive legislative session, Corbett failed to muster enough support to push through his idea. His proposal to privatize the state-run liquor system also fell short for a second year. "The budget I received tonight makes significant investments in our common priorities of education, jobs and human services," Corbett said in a statement.

"It leaves pensions, one of the largest expenses to thecommonwealth and our school districts, on the table." The state was facing a shortfall of at least $1.5 billion, according to some estimates. Pennsylvania has about $50 billion of unfunded long-term pension liabilities. To close the gap without raising taxes, the spending plan includes a controversial measure for one-time transfers of money from dedicated funds, such as one that helps volunteer fire companies purchase equipment.

Corbett has 10 days to sign or veto the bill or it becomes law without his signature.

His decision appeared to take lawmakers by surprise as he had earlier said only that he was considering the budget bill's impact on Pennsylvanians.

Earlier on Monday, the Pennsylvania Senate unanimously approved a token pension reform plan moving themselves and other state elected officials - but not state employees or teachers -into a 401(k) plan. The bill now moves to the House.

Republican lawmakers had praised their budget for increasing overall education spending by $316 million while not raising taxes. Democrats, none of whom voted for the budget in either chamber, condemned the failure to tax shale gas extraction and the lack of more education funding.

(Editing by Hilary Russ and Ron Popeski)

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Comments (4)
BGoldberg wrote:
Too bad that we’ve gotten to where pensions are just a ginormous obligation on state’s and localities. I am a huge supporter of employer sponsored retirement plans. I have a great one myself through my employer. But it’s a total 401k style plan that is awesome. Switching all state, federal and local workers to this type of plan is good for long term fiscal purposes and it still allows for generous matching if the funds are there to match the employees contributions. Governors are going to have to take a hard and serious look at their state’s pension issue, sooner rather than later. As much as unions are against this shift in benefits funding, it’s not for the unions to hold state’s hostage to demands in retirement planning contributions that potentially could destroy balanced budget planning efforts down the road. Public employee pensions are a ginormous portion of many state budgets, taking funding from other areas that the general population should all be benefitting from.

Jul 01, 2014 9:55am EDT  --  Report as abuse
njglea wrote:
Good People of Pennsylvania, get rid of Mr. Corbett ASAP before he can further try to destroy your state to feed Wall Street.

Jul 01, 2014 10:45am EDT  --  Report as abuse
CliftonC wrote:
Hang in there Governor. Pension reform is a must.

Jul 01, 2014 12:07pm EDT  --  Report as abuse
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